Lending hard money for the first time: need help

8 Replies

New to the site.

We are first-time investors looking to lend out hard money starting in March and need to be cashed out by Sept/Oct. We just relocated to Salt Lake City and don't know anyone. Attending our first Utah REIA meetings in SLC next week. We originally wanted to just buy a rental property with the money, but more and more we are leaning toward lending it out instead.

What credentials should we look for, questions should we ask, terms and contracts we should consider, types professionals for advice should we hire, really anything that will help us not make stupid newbie mistakes.

Any advice and referrals are welcome!

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@Emma Powell

I'd recommend looking at the person's track record and experience.  I'm curious why you need the payoff at that time.  Are you going to just do this one loan and cash out or do you want to loan again in the future?  I agree with Alex that the rate would need to be appealing for the short term.  

For lending, I think the property is as important as the borrower. I'd only loan on something I wouldn't mind owning if I had to foreclose. I always borrow less than 70 percent LTV to make sure my lender is in a secure position as well. Valuing the property and estimated repairs will be important to make sure you are lending at an LTV that you are comfortable with.

Good luck,


If you need the money for sure in 6 months don't lend it out. I have done lending and projects often exceed (and sometimes far exceed) the projections. I have found those delays to be actually profitable. But I never lend out money I need in the short term

@Anish Tolia   Anish is correct if your lending on a deed of trust.. there is no gurantee that the loan will be paid on time.. stuff happens.. it just does in this business..

I think Peer street just came out with a 30 day product.. you can check that out..

I am not soliciting you.. however I do this for close clients of mine where I can accommodate for 3 to 6 months.. as I can repay out of my cash I don't need to sell anything.. but most that are in the business are not as cashed up.. and the reason they are borrowing is they need the cash.. LOL... and if you don't sell the asset they simply don't have the means to pay you back.. nor should they if the loan is asset based rather than a company obligation..

Time frame of 6-8 months is to close on a property, but if we withheld enough for a down payment to close, then refi later, that's fine. What other risks are there? Seems worst case is getting the property itself, but I must be naive. What's actual worst case?

@Emma Powell   I don't like to a poo-poo ideas, but if you're asking these kinds of questions I would highly advise you DO NOT become a hard money lender just yet - you're asking to get your buns kicked.  At a minimum you should team up with somebody who is doing hard money loans right now, somebody who knows the system (or at least has a system), who knows how to get things done and can assess the risk as accurately as possible.   

I've seen a handful of local hard money guys get absolutely rodeo'd on some pretty janky deals because they didn't know what they didn't know, so they had no idea how to deal with what they didn't realize could (and did) happen.

There are several hard money lenders in both UT and SL counties.  Strike a deal with one of those guys to learn the ropes before you dive in head first.

That's always my preferred route, mentorship or doing business with people for awhile. That's why this time crunch turns me off: we don't know anyone here yet. The rehabbers and developers I already do know live in other cities, so even though we have an existing relationship of trust, I don't want to end up with a property outside of SLC.

I think we're going to buy some real estate with the money ourselves and come back to lending once our network is stronger. Besides, with quotes at 8% it doesn't make sense to let house prices go up while we are not buying and not collecting rent.

The good news is that all I've learned during the research phase these past months tells us we definitely want to and will do this... eventually. It's good to find options that still appeal to us even after digging into it. For now, buy and hold makes more sense based on our comfort and experience level.

@Emma Powell


I'd be glad to take a moment and chat with you. I know a couple local lenders that take on new lenders and combine funds and handle the whole process. They also have the ability to foreclose on the property if necessary and then remodel and sell it.

Feel free to pm me your contact info if you would like to talk further. I can also spend a few minutes talking to you about rentals as well.

Good Luck!

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